Have You Been Panic Buying?

When the GFC happened, I was managing so little money the whole thing was a non-event for me. Sure enough, I experienced swings in emotion but my losses and gains from that period barely registered in my current balance sheet. So going into this crisis, I was determined to make it count.

I have made as many trades in the last 6 weeks as I have in the whole of the 2019 calendar year, and those trades are overlaid with the ASX200 index value in the following chart.

covid-trades

There are a few things to be pleased about. First of all, I was genuinely excited about the market fall and was able to put to work a not insignificant amount of capital quite quickly. This was made partly possible by a rather conservative portfolio going into this market event, with the bulk of my money in companies and funds that themselves hold significant amounts of cash, which frees my mind from having to worry about damages to them. The second thing to be pleased about is that even though each buy decision is a based on a company-specific analysis, most of the buys turned out to coincide pretty closely with the market low (so far) on 23 March.

I am still in the red from these investments, obviously. And I may well go further into red if the market dips again, which is at least as likely as further upswings from here. It is simply impossible to know where the market will go in the short term. But I think I am practising the theory well, and time will tell whether this time is different or history does indeed rhyme.

 


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